The MP3 Vs. the E-Book: 'Online Music Then and Now' SXSWi Examines What We Have (And Haven't) Learned ...

The MP3 Vs. the E-Book: 'Online Music Then and Now' SXSWi Examines What We Have (And Haven't) Learned ...

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In 1999, Diamond Multimedia's Rio became the first portable mp3 player to be commercially successful. Eight years later, the Kindle brought a similar level of mobility to books. Needless to say, the two game-changing devices met with different results and reactions. Rob Reid, founder of Listen.com (which became Rhapsody) and also a publishing industry vet, talked about the two situations during his "Rhapsody To Year Zero: Online Music Then & Now" panel on Saturday at SXSWi.

In the five years after the release of the Rio, U.S. recording industry sales dropped notably. Consumer publishing sales have not suffered in the same way since the release of the Kindle.

Why? The music industry, says Reid, attacked entrepreneurs who could have provided better product than piracy. The record labels wanted to make portable mp3 players illegal, he told attendees. The suit of mp3.com was a "toxic case" that sent a "clear message."

With the premiere of the iPod in 2002, mp3 players now had enough room for more than 6,000 songs. But the iTunes store wasn't released until the next year because Apple had yet to reach a deal with all of the major labels. Consumers were "clamoring" for mp3s to fill their players, but the files weren't legally available and thus resorted to piracy. Reid says innovation suffered because the music industry trained consumers to become accustomed to free, pirated products.

Broadly speaking, online music services in 2012 don't look that much different from 10 years ago: There are a la carte sales, streaming services and interactive radio sites. This is because the talent and capital isn't in music apps, Reid asserted. Instead, it's in other areas, such as locative apps like Glancee, one of the much-heralded newcomers at this year's SXSW.

By contrast, book publishers have embraced the digital media. Around 90% of the New York Times' bestsellers were available on the Kindle as soon as the device was released, including all six major international publishers.

"The publishers got out there with a product that was way better than piracy," says Reid. Content, retail presentation, delivery and reasonable prices all played a role in creating this good experience.

Physical book sales have still dropped significantly, and in a way that resembles the drop in music sales, but the publishing industry is working to make up for the decrease with digital sales But the growth of self publishing, is not helping the book publishing's bottom line. Nearly half, in fact, of Kindle's best sellers are self published.

Toward the end of the presentation, Reid seemed to backpedal a bit saying the transition from the CD to internet was sudden, violent and not easy, he said. "It's easy for someone like me to critique their actions," he said, referring to music industry executives during the beginning of the move to the web, "but almost no one could have gotten this right."